1st Maryland to buy S&L in Virginia $83 million deal will expand the bank to Northern Virginia

Md. firm may change name

Shareholders to get 1.8 times book value of 1st Washington

Banking

January 25, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

First Maryland Bancorp has signed a definitive agreement to acquire 1st Washington Bancorp, a Herndon, Va.-based savings and loan holding company for $83.5 million in cash, First &L Maryland said yesterday.

First Maryland, a wholly owned subsidiary of Allied Irish Banks PLC, said it will pay $8.125 a share, representing 1.8 times 1st Washington's book value on Sept. 30.

The move comes just three weeks after the $10.5 billon-asset company's president and chief executive, Frank P. Bramble, said he would boost First Maryland by $5 billion to $8 billion over the next two years.

"This is a start," Mr. Bramble said. "This is where we wanted to be. We were just looking for the right transaction in our marketplace."

Mr. Bramble declined to comment on whether the company is in negotiations to make any other acquisitions.

"Our focus is still in the Washington metropolitan area," Mr. Bramble said. "This should not be construed as our last effort to acquire in the Washington metro area."

The acquisition, which is subject to approval by regulators and 1st Washington's shareholders, is expected to close June 30.

The deal expands First Maryland's franchise into Northern Virginia for the first time. 1st Washington has $801 million in assets -- $357 million in loans, and $449 million in deposits. The company operates 17 branches: nine in Washington, five in Prince George's and Montgomery counties, and three in Northern Virginia.

"For First Maryland, I think it is a total win-win," said Arnold Danielson, president of Danielson Associates Inc., the Rockville-based bank and thrift consulting firm. "For 1st Washington, I think they are doing a good job by exiting."

1st Washington has been in a turnaround mode since 1991 when its capital levels fell dangerously low after losing money on commercial real estate loans. That is when Carroll E. Amos took charge as president and chief executive. Since then, he has stabilized the company and returned it to profitability.

Mr. Amos declined to comment on his future employment.

Despite Mr. Amos' efforts, 1st Washington still isn't a big earner. The company's annualized return on average assets in its fiscal first quarter ended Sept. 30, was 0.68 percent, which means that for every $100 in assets, the company earned 68 cents.

Mr. Bramble said First Maryland will add new products and services to the branches to generate more business. The company also will offer loans to small businesses and middle-market companies with sales ranging from $5 million to $100 million, he said.

"We think we can dramatically improve the earnings performance over time," he said. "What we are basically doing is buying a franchise and a customer list."

Mr. Bramble said he expects that First Maryland will be well received since it already operates 40 branches in Washington and its Maryland suburbs. In all, First Maryland has 181 branches.

He said the First Maryland name may become an issue as the company expands further into Virginia. "Over time, we may think of possibly changing the name," Mr. Bramble said.